Overview of CPTPP

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), one of the largest free trade agreements in the world, was concluded on 23 January 2018 in Tokyo, Japan, and signed on 8 March 2018 in Santiago, Chile. The CPTPP is currently in force for eight of the 11 Parties – it entered into force on 30 December 2018 for Australia, Canada, Japan, Mexico, New Zealand, and Singapore; 14 January 2019 for Vietnam; and 19 September 2021 for Peru. The CPTPP provides a rules-based trading environment and enhances market access for Canadian exporters looking to export to Vietnam. Among other outcomes, it establishes duty-free access for trade in goods between Canada and Vietnam, eliminates tariffs for many key Canadian exports and provides solutions for digital trade issues through a comprehensive e-commerce chapter. Trade between the two countries has improved as a result of CPTPP. Vietnam was Canada’s largest trading partner in ASEAN in 2020 – two-way merchandise trade between the two countries reached an all-time high of about USD 9 billion in 2020, up from USD 8 billion in 2019, predominantly driven by Canadian exports to Vietnam. After Indonesia, Vietnam was the second-largest destination in ASEAN for Canadian agricultural and seafood products in 2020. According to Export Development Canada (Canada’s export credit agency), despite the effects of the pandemic, Canada shipped goods worth USD 548 million to Vietnam in 2020, of which agri-food accounted for about USD 284 million (around 52%). Once the agreement is fully implemented, Canada will have duty-free access to Vietnam for 94% of its agriculture and agri-food products exports. This will help Canada level the playing field with regional competitors that already enjoy privileged access to the Vietnamese market through Free Trade Agreements (FTAs), and provides an advantage over those countries that are still exploring or negotiating FTAs with Vietnam. Canadian small and medium‑sized enterprises in these sectors are already taking advantage of the tariff reductions and eliminations under CPTPP. For example, Ocean Choice International Inc, an exporter of wild‑caught seafood from Atlantic Canada, has become increasingly active in the Vietnam market, which has eliminated or significantly reduced tariffs for Canadian fish and seafood products. Dale Oldford, vice‑president of product management at Ocean Choice, said, “The biggest benefit of the agreement for a company like Ocean Choice – while it’s hard to put sales numbers on it – is that it’s opened up many more discussions about our products.” He explained that tariff reductions have helped the company in terms of pricing and volumes and added that the company’s future plans include focusing on dynamic countries in the Asia‑Pacific region such as Vietnam that have “fairly significant population bases and all the right demographic profiles.” Canadian Vita Corporation, a supplier of ginseng products, benefited from the elimination of a 5% tariff on ginseng under CPTPP and reduced paperwork for exporters and importers through the agreement’s self-certifying Certificate of Origin process. Hieu Tran, CEO of the company, found strong demand for the Canadian‑grown ginseng that he brought with him on a fact‑finding trip to Vietnam in 2019. Subsequently, the Trade Commissioner Service (TCS) in Hanoi informed the company about how CPTPP can help, assisted in areas such as the paperwork and licences needed to import ginseng into Vietnam and hosted events to introduce the company to potential partners and customers and provided contacts. By early 2022, 60% of the company’s sales were from Vietnam, with another 25% coming from Singapore and Malaysia – both of which are also CPTPP members. Canadian Vita has opened its own stores in Vietnam, and plans to have one in every Vietnamese province by 2023. Canadian exporters in the provinces listed in the below table stand to benefit from tariff elimination on their key agricultural and agri-food product exports.

Tariff elimination

• Products under HS codes 02.01 & 02.02 (Meat of bovine animals, fresh or chilled/frozen) reached 0% tariff in year 3 (2020).
• Products under HS code 02.03 (Meat of swine, fresh, chilled or frozen) will reach 0% tariff between year 8-10 (2025-2027). In year 5 (2022), products under HS code 02.03 are subject to tariffs in the range of 5.6% to 13.5%.
• HS codes 02.04 & 02.05 (Meat of sheep or goats, fresh, chilled or frozen & Meat of horses, asses, mules or hinnies, fresh, chilled or frozen) reached 0% tariff in year 4 (2021).
• Products under HS codes 02.06 (Edible offal of bovine animals, swine, sheep, goats, horses, asses, mules or hinnies, fresh, chilled or frozen) are moving to 0% tariff by years 5 (2022), 6 (2023) or 11 (2028), depending on the product codes at the 6-digit level. In year 5 (2022), products under HS code 02.06 are subject to tariffs in the range of 0% to 5.4%.
• Products under HS codes 02.07 (Meat and edible offal, of the poultry of heading 01.05, fresh, chilled or frozen) will reach 0% tariff between year 6 (2023) and year 13 (2030). In year 5 (2022), products under HS CODE 02.07 are subject to tariffs in the range of 6.6% to 24.6%.
• Products under HS code 02.08 (Other meat and edible meat offal, fresh, chilled or frozen) will reach 0% tariff by year 6 (2023). In year 5 (2022), products under HS code 02.08 are subject to reached tariffs in the range of 0.8% to 1.6%.
• Products under HS code 02.09 (Pig fat, free of lean meat, and poultry fat, not rendered or otherwise extracted, fresh, chilled, frozen, salted, in brine, dried or smoked) will reach 0% tariff by year 8 (2025). In year 5 (2022), products under HS code 02.09 are subject to a tariff rate of 3.7%.
• Products under HS code 02.10 (Meat and edible meat offal, salted, in brine, dried or smoked; edible flours and meals of meat or meat offal) will reach 0% tariff between years 7 to 12 (2024-2029). In year 5 (2022), products under HS CODE 02.10 are subject to tariffs in the range of 5% to 11.6%.

• Between year 01 (2018) and year 05 (2022), all products under HS code 04 reached 0% tariff, except 0407.21.00A & 0407.21.00B (other fresh fowl eggs of the species Gallus domesticus, which are within & out of WTO quota respectively), 0407.29.10A & 0407.29.10B (other duck eggs within & out of WTO quota respectively), 0407.29.90A & 0407.29.90B (other eggs within & out of WTO quota), and other eggs under HS code 0407.90 with categories A & B (within & out of WTO quota).
• For 0407.21.00A, 0407.29.10A, 0407.29.90A, and 0407.90 (category A products), the applicable tariff is 5% in year 5 (2022) and will reach 0% tariff by year 6 (2023).
• For 0407.21.00B, 0407.29.10B, 0407.29.90B, and 0407.90 (category B products), the applicable tariff is 80% in year 5 (2022) and this value will remain consistent in the future years.

• Products under HS code 08 reached 0% tariff between year 1 (2018) and year 5 (2022), except 0805.10.20 (dried oranges), 0805.90.00 (other citrus fruit, fresh or dried), 0813.10.00 (dried apricots), 0813.30.00 (dried apples), products under the code 0813.50 (mixtures of nuts or dried fruits), and 0814.00.00 (peel of citrus fruit or melons including watermelons, fresh, frozen, dried or provisionally preserved in brine, in sulphur water or in other preservative solutions).
• For 0805.10.20 and 0805.90.00, the tariff rates in year 5 (2022) are 3.3% and 6.6% respectively and the tariffs will reach 0% in year 6 (2023).
• For 0813.10.00, 0813.30.00, and all products under the code 0813.50, the applicable tariff in year 5 (2022) is 5% and the tariff will be reduced to 0% in year 6 (2023).
• For 0814.00.00, the tariff in year 5 (2022) is 1.6% and the tariff will be reduced to 0% in year 6 (2023).

Applicable tariffs for products under HS code 17 ranges between 0% and 100% in year 5 (2022). By year 11 (2028), all products under HS code 17 will reach 0% tariff, except 1701.12.00B (raw beet sugar [out of WTO quota], not containing added flavouring or colouring matter), 1701.13.00B (raw cane sugar [out of WTO quota], not containing added flavouring or colouring matter), 1701.14.00B (other raw cane sugar [out of WTO quota], not containing added flavouring or colouring matter), 1701.91.00B (other cane or beet sugar [out of WTO quota] containing added flavouring or colouring matter), 1701.99.11B (other refined white sugar [out of WTO quota]), 1701.99.19B and 1701.99.90B (other refined sugar [out of WTO quota]).

• For 1701.12.00B, 1701.13.00B, and 1701.14.00B, the tariff in year 5 (2022) is 80% and this value will remain consistent in the future years.
• For 1701.91.00B, the tariff in year 5 (2022) is 100% and this value will remain consistent in the future years.
• For 1701.99.11B, 1701.99.19B, and 1701.99.90B, the tariff in year 5 (2022) is 85% and this value will remain consistent in the future years.

• Products under HS code 19.01 (Malt extract; food preparations of flour, groats, meal, starch or malt extract, not containing cocoa or containing less than 40% by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included; food preparations of goods of headings 04.01 to 04.04, not containing cocoa or containing less than 5% by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included) will reach 0% tariff in years 3-6 (2020-2023). In year 5 (2022), products under HS code 19.01 will reach tariffs in the range of 0% to 3.3%.
• Products under HS code 19.02 (Pasta, whether or not cooked or stuffed (with meat or other substances) or otherwise prepared, such as spaghetti, macaroni, noodles, lasagne, gnocchi, ravioli, cannelloni; couscous, whether or not prepared) will reach 0% tariff in years 6-8 (2023-2025). In year 5 (2022), products under HS code 19.02 are subject to tariffs in the range of 3.3% to 12.7%.
• Products under HS code 19.03 (Tapioca and substitutes therefor prepared from starch, in the form of flakes, grains, pearls, siftings or in similar forms), 19.04 (Prepared foods obtained by the swelling or roasting of cereals or cereal products (for example, corn flakes); cereals (other than maize (corn)), in grain form or in the form of flakes or other worked grains (except flour, groats and meal), pre-cooked or otherwise prepared, not elsewhere specified or included) and 19.05 (Bread, pastry, cakes, biscuits and other bakers' wares, whether or not containing cocoa; communion wafers, empty cachets of a kind suitable for pharmaceutical use, sealing wafers, rice paper and similar products) reached 0% tariff in year 4 (2021).

• Products under HS code 21-01 (Extracts, essences and concentrates, of coffee, tea or maté, and preparations with a basis of these products or with a basis of coffee, tea or maté; roasted chicory and other roasted coffee substitutes, and extracts, essences and concentrates thereof) will reach 0% tariff in year 6 (2023). In year 5 (2022), products under HS code 21.01 are subject to tariffs of 6.6%.
• Products under HS code 21.02 (Yeasts (active or inactive); other single cell micro-organisms, dead (but not including vaccines of heading 30.02); prepared baking powders) reached 0% tariff in year 1 (2018).
• Tariff rates on products under HS code 21.03 (Sauces and preparations therefor; mixed condiments and mixed seasonings; mustard flour and meal and prepared mustard) are being reduced to 0% in years 5 and 6 (2022 and 2023). In year 5 (2022), products under HS code 21.03 are subject to tariffs in the range of 0% to 5.6%.
• Products under HS code 21.04 (Soups and broths and preparations therefor; homogenised composite food preparations) will reach 0% tariff in year 6 (2023). In year 5 (2022), products under HS code 21.04 are subject to tariff of 6.6%.
• Products under HS code 21.05 (Ice cream and other edible ice, whether or not containing cocoa) reached 0% tariff in year 5 (2022).
• Products under HS code 21.06 (Food preparations not elsewhere specified or included) will reach 0% tariff in years 4-6 (2021-2023). In year 5 (2022), products under HS code 21.06 reached tariffs of 0% to 4.1%.

Tariff Rate Quotas (TRQ) are applicable for all products under HS code 2401 (unmanufactured tobacco; tobacco refuse) between year 1 (2018) and year 20 (2037), with base rate ranging between 80% and 90%. From year 21 (2038) onwards, the applicable tariff rate for products under HS code 2401 would be 0%.

For all other products under HS code 2402 (cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes) and HS code 2403 (other manufactured tobacco and manufactured tobacco substitutes; “homogenised” or “reconstituted” tobacco; tobacco extracts and essences), the applicable tariffs in year 5 (2022) range between 20.6% and 92.8%. All products under HS code 2402 and 2403 will reach 0% tariff by year 16 (2033).

Rules of origin

The amount of production that must be undertaken on a product in Canada for the product to be considered originating and eligible for CPTPP’s preferential tariff treatment is determined by the Rules of Origin.

The proof of origin that is used to certify that the good meets the rules of origin is referred to as a certification of origin and consists of a set of minimum data requirements that are provided in annex 3-B of the origin procedures. The certification of origin may be placed on any document, including an invoice, and does not need to follow a prescribed format. Unlike Canada’s other free trade agreements in which the exporter completes the certification of origin, the CPTPP allows the importer, the exporter or the producer to choose to complete the certification of origin (without the need for verification by competent authorities). The parties are obligated to allow the certification of origin to be provided electronically and in no prescribed format, but it must contain the minimum data requirements set out in the origin procedures. The trader may also choose to complete a single certification of origin for multiple shipments of identical goods for a period of up to one year.

In general, goods qualify as originating if they are:

1. wholly obtained or produced entirely in the territory of one or more of the Parties as established in Article 3.3 (Wholly Obtained or Produced Goods);
2. produced entirely in the territory of one or more of the Parties, exclusively from originating materials; or
3. produced entirely in the territory of one or more of the Parties using non-originating materials provided the good satisfies all applicable requirements of Annex 3-D (Product-Specific Rules of Origin),

and the good satisfies all other applicable requirements of Chapter 3 – Rules of Origin and Origin Procedures

From an agriculture and agri-food products perspective, goods are considered to be wholly obtained or produced entirely in the territory of one or more of the Parties if, and only if, the goods are:

1. plants, or goods obtained from plants, that are grown, cultivated, harvested, picked or gathered in the territory of one or more of the Parties; or
2. live animals born and raised in the territory of one or more of the Parties; or
3. goods obtained from live animals in the territory of one or more of the Parties; or
4. animals obtained by hunting, trapping, fishing, gathering or capturing in the territory of one or more of the Parties; or
5. goods obtained from aquaculture conducted in the territory of one or more of the Parties; or
6. fish, shellfish or other marine life taken from the sea, seabed or subsoil beneath the seabed:
   1. outside the territories of the Parties; and
   2. in accordance with international law, outside the territorial sea of non-Parties; by vessels that are registered, listed or recorded with a Party and are entitled to fly the flag of that Party; or
   1. has been derived from production in the territory of one or more of the Parties; or
   2. has been derived from used goods that are collected in the territory of one or more of the Parties and that are fit only for the recovery of raw materials; or

   In addition to the generic details shared above with regards to the Rules of Origin, there are certain product-specific rules and exceptions that are detailed below for agricultural and agri-food products.

   Product-specific rules of origin and exceptions for agricultural and agri-food products
   • Fresh, chilled and frozen beef/pork, bovine/swine offal: Meat cuts (e.g., beef/pork) and offal must be slaughtered in the FTA territory for it to be considered originating meat. For example, live animals under HS code 01 can be imported from a non-CPTPP member country but must be slaughtered and converted to cuts in a CPTPP country, such as Canada, for it to meet the rules of origin requirements.
   • Sausages: Non-CPTPP meat and meat offal can be used in the production of sausages, as long as they are transformed in the CPTPP territory. For instance, Canadian sausage can meet the rules of origin, even if a percentage of swine offal from the United States has been used in its production, but it must be processed and transformed into sausage in Canada.
   • Fish, crustacean, mollusc, or other aquatic invertebrate obtained in the territory of a Party is originating even if obtained from eggs, larvae, fry, fingerlings, parr, smolts or other immature fish at a post-larval stage that are imported from a non-Party. Having said that, fish and seafood must be completely obtained in CPTPP territorial waters or in international waters using registered vessels in CPTPP countries. For instance, salmon or lobster caught or captured in Canadian seas would meet the rules of origin.
   • Exceptions: There are exceptions for certain preparations and products. For example, non-CPTPP crustaceans and molluscs smoked in Canada would meet the rules of origin as they are considered transformed. That does not apply to non-CPTPP salmon smoked in Canada.
   • In general, products that have gone through significant transformation in Canada, such as wine being produced in Canada from non-CPTPP grapes or grape juice, or non-CPTPP coffee beans being roasted and processed into ready-to-drink coffee in Canada, would be considered originating.
   • Exceptions: For certain spirits, the total alcoholic volume of non-CPTPP materials should not exceed 10% of the alcoholic volume of the total alcoholic strength of that product. There are other exceptions also, as the rules of origin applicable to beverage products under HS code 22 vary on a by-product and by-preparation basis. Exporters are encouraged to research the specific rules applicable to their products in Vietnam.
   • Natural honey: The bees themselves do not have to be of CPTPP origin, but the process of extracting the honey must be undertaken in the CPTPP territory.
   • Maple sugar and syrup for maple products: Must be completely captured from maple trees in the CPTPP territories. Maple syrup totally obtained from Canadian maple trees would meet the rules of origin.
   • Canola and soy: Must be completely obtained from a plant or plant good grown, cultivated, harvested, picked, or gathered in the CPTPP territory. For instance, canola seeds obtained from Canadian canola fields can meet the rules of origin.
   • Vegetable oils, including canola and soybean oils: Can be produced using non-CPTPP oilseeds if they are crushed in the CPTPP territory. However, the refining of crude vegetable oils from non-CPTPP inputs is usually insufficient to be considered originating.

   Source: Global Affairs Canada

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